If you are reading these lines chances are you are either very well familiar or you have at least heard of the legendary investor – Warren Buffet, and his fund Berkshire Hathaway. I don’t think he needs an introduction, therefore we are going to move on straight to the fund’s 2018 Annual Investor Letter, which was published at the end of February. A copy of the letter you can download below.
Among other things in the report, Berkshire Hathaway disclosed its compounded annual gain from 1965 through 2018 of 20.5%, beating the S&P 500, which posted gains of 9.7% for the same period. It also reported receiving dividend payments in the amount of $3.8 billion in 2018, and that it expects this sum to grow bigger in 2019.
“Wide swings in our quarterly GAAP earnings will inevitably continue. That’s because our huge equity portfolio – valued at nearly $173 billion at the end of 2018 – will often experience one-day price fluctuations of $2billion or more, all of which the new rule says must be dropped immediately to our bottom line. Indeed, in the fourth quarter, a period of high volatility in stock prices, we experienced several days with a “profit” or “loss” of more than$4 billion.
Our advice? Focus on operating earnings, paying little attention to gains or losses of any variety. My saying that in no way diminishes the importance of our investments to Berkshire. Over time, Charlie and I expect them to deliver substantial gains, albeit with highly irregular timing.”
You can download a copy of Berkshire Hathaway’s Q4 2018 investor letter below: